Should we temporarily subsidize oil shale production in response to OPEC

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View Poll Results: Should we temporarily subsidize domestic oil shale production in response to OPEC?

Re: Should we temporarily subsidize oil shale production in response to OPEC

Originally Posted by SouthernDemocrat

Yet another item to add to the list of Bush Administration failures.

Darn, guess they didn't go to war for oil.

"He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
"Fly-over" country voted, and The Donald is now POTUS. #MAGA

Re: Should we temporarily subsidize oil shale production in response to OPEC

Originally Posted by mak2

Sorry. I am funny as hell, but often it is lost on the internet. I will pay more attention.

Noted.

"He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
"Fly-over" country voted, and The Donald is now POTUS. #MAGA

Re: Should we temporarily subsidize oil shale production in response to OPEC

To play the devils advocate here, the problem is we have private domestic oil producers competing against a cartel of largely state owned oil producers. It is in our national interest to maintain production and long term investment our tight oil reserves (shale oil). However, because we are competing against state owned oil companies with OPEC, its an unfair fight as they can afford to draw on their treasury reserves to float their state owned oil companies and temporarily depress worldwide oil prices and possibly put our domestic tight oil production out of business. Therefore, it could make sense for the government to back some short term interest free loans or something along those lines to keep those domestic producers in business long enough to wait out OPEC. Once OPEC sees that we will not allow them to destroy our domestic oil production industry, they will have no incentive to take short term losses on their end in an attempt to manipulate the market and gain market share.

"You're the only person that decides how far you'll go and what you're capable of." - Ben Saunders (Explorer and Endurance Athlete)

Re: Should we temporarily subsidize oil shale production in response to OPEC

Originally Posted by SouthernDemocrat

To play the devils advocate here, the problem is we have private domestic oil producers competing against a cartel of largely state owned oil producers. It is in our national interest to maintain production and long term investment our tight oil reserves (shale oil). However, because we are competing against state owned oil companies with OPEC, its an unfair fight as they can afford to draw on their treasury reserves to float their state owned oil companies and temporarily depress worldwide oil prices and possibly put our domestic tight oil production out of business. Therefore, it could make sense for the government to back some short term interest free loans or something along those lines to keep those domestic producers in business long enough to wait out OPEC. Once OPEC sees that we will not allow them to destroy our domestic oil production industry, they will have no incentive to take short term losses on their end in an attempt to manipulate the market and gain market share.

The problem is far more complex than that, but I can point out a couple of issues with the notion you were going with.

Right off the top shale oil does not represent all our domestic oil extraction capabilities. At the same time I would argue that we have much bigger issues with oil refinement and regulation intentions right here at home causing more headwind against energy independence than other factors. As a nation we have experienced a great deal of legislative intentions over the years for our oil production, often causing our own problems or removing large deposits (of many kinds) from exploration and extraction.

With shale oil specifically, there is a legitimate US interest but we have inherent complications. Deposits of shale oil exist in plenty of locations around the planet but some 60% to 70% (depending upon source you like) of the worlds shale oil deposits are right here in the US. That is the interest. The problem is the term shale oil is a bit of a misnomer. Shale oil is basically a fine grain rock and takes intensive extraction and refinement energy processes to turn into something along the lines of oil. That is one of many reasons production and extraction makes the break even price for shale oil so high. Truth be known we are seeing today a repeat of history. Back in the early 1980s, Exxon got bit in the arse by falling oil prices in conjunction with their shale oil projects in Colorado, losing some $4 to $5 billion in deals walked away from. Those were actual drilling in the ground projects brought to a halt.

What we are seeing today is what we have seen before, and similar arguments were made back then on how to keep shale oil production in conjunction with other type oil productions with far less break even prices. Investment dollars into shale oil project need either assurance of oil price or assurance of "help" if oil continues to stay below $80 or even $90 per barrel. I have personally seen prospectuses written on projects all over this nation suggesting if oil can maintain $100 per barrel over a long term then there is long term return, without everyone walks away literally leaving the equipment on the property until price levels can be maintained over a sustainable period.

Personally I see no reason to do this today. Those shale oil deposits are not going anywhere and at some point down the line there will be an economic reason to go after shale oil. You have to understand at these quick price drops there will be even some oil sands projects walked away from. Today we have enough alternatives right here in the US to keep going with domestic extraction and production. Our present problem is the political will up in DC to allow that to happen including refinement restrictions and of course EPA restrictions. Subsidies on top of the existing mess would be a disaster.

"Every time something really bad happens, people cry out for safety, and the government answers by taking rights away from good people." - Penn Jillette.

Re: Should we temporarily subsidize oil shale production in response to OPEC

Oil producers are the last people who need subsidies. How about we enjoy the low gas prices instead of trying to inflate them again?

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Re: Should we temporarily subsidize oil shale production in response to OPEC

Originally Posted by Lakryte

Oil producers are the last people who need subsidies. How about we enjoy the low gas prices instead of trying to inflate them again?

I've read stories about how falling gas prices are actually a bad thing for the economy, and while I'm sure there are some precautions that need to be maintained, I'm having a hard time feeling bad about it.

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You know, it used to be when you bought a politician, that son of a bitch stayed bought.

Re: Should we temporarily subsidize oil shale production in response to OPEC

Originally Posted by SouthernDemocrat

OPEC is currently using their market power to engage in a price war with the United States in the hopes that it will put our tight oil suppliers out of business. If oil prices drop to a point that oil shale production is no longer profitable (below 60 dollars a barrel), do you think the United States should temporarily subsidize producers in order to keep that production and all of the infrastructure supporting it online for when oil prices inevitably rise again?

I'd rather see greater subsidies on electric cars and if we had the money, buying up domestic oil that can be used to increase the level of the US oil reserve. IMO the best thing to do is do some permanent damage to OPEC by getting more cars on the roads that don't require oil, help advance their development and their acceptance. The money being spent on electric cars, the less be have to spend on ISIS, Al Qaeda, etc. and at the same time the more rapidly the technology improves and in time production costs go down (see the cell phone, PC, HDTV, and so on.)

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